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Assignment 1

Uploaded by

吳卓蔚
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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BECOIOOOPrinciples of Microeconomics (010), 2022/2023-1

Assignment t (due October 19, 2023, in-class)

Name (student no): (

The assignment may be completed in groups of I to 3 students.


Give brief and concise explanation, show all steps in calculation, and label your diagrams clearly.

Quesdon One (Production Possibilities Frontier, PPF)


Production point Pizza produced CDs produced
and 4
B 4 and 4
and
12 and 30
16 and 22
20 and 12
24 and 0
The table above lists seven production possibilities ofan economy for pizza and CDs per month.

(a) Graph the PPF in the diagram below, and label it PPFI.

50

40 B

E
30

20

O 5 10 15 20 25
Pizza (numberper month)

(b) Can the economy produce 8 pizzas and 36 CDs per month? Why? What is the economic
condition?
(DS (8 €22b) qS

1
(c) Can the economy produce 10 pizzas and 20 CDs per month? Why? What is the economic
condition?

(d) What is the opportunity cost of producing the first four pizzas on average? The next four
pizzas on average? What do your results show? Why?

(e) Suppose there is a strike of workers producing pizzas, and the workers limit their working
hours per month below the normal working hours. How would the PPF be affected? Draw
on your graph in (a) the new curve, and label it PPF2.

2
Question npo (Supply and demand)
Price Quantity demanded Quantity supplied
(dollan per pim) (pizzng per week) (pizzas per week)

8 600
9 550 700
10 800
11 4
2 400 1 000
A market research team has come up with the demand and supply schedules for pizza in
Cheeseboro per week. These schedules are given in the table above. Use these data to analyze
the situation in the market for pizza.
(a) Draw in the diagram below the demand curve for pizza and the supply curve of pizza, and
label them DI and Sl respectively.
14

b 12

O 10

O 200 400 600 800 1,000 1,200


Quantity (pizzas per week)

(b) Suppose the price is $10. Describe the situation in the market and explain how the price of
pizza adjusts.

fis

3.
(c) What are the equilibrium price and equilibrium quantity?

(d) The market tvseatvh also includes a prediction about the effect on the market for
pim in Cheeseboro of a recent news published in Cheeseboro Daily. The Daily reported
that pizza has been discovered to help prevent heart diseases. Unfortunately,your dog
chewed up the report and all you can read about the predictionis ... quantity of pizza
demanded by 150 at each price." What does the prediction say? Use your graph to show the
predicted effects on the market for pizza, and label the new demand curve D2 or supply
curve S2. How will the market adjust? What are the predicted equilibriumprice and
equilibrium quantity?
S will

12

IV

1.1

wek)

Question Three (Price elasticityof demand)


A sporting goods store has estimated the demand curve for a specific brand of running shoes as
a function of price.
Price per pair Quantity demanded of shoes Total revenue
(pairs)

60 100
50 200
c 40 300
D 30 400
20 500
1

(a) Complete table by calculating the total revenue received by the store at each price level.
4
(d) When price decreases nom A to total revenue
(increases/remains unchanged/decrenses) because demand is
(elastic/unitary elastic/inelastic). When price decreagcg from C to D, total revenue
(increases/remains unchanged/decreageg) because demand is
(elastic/unitary elastic/inelastic). When price decreases from E to
F, to tevenue (increases/remains unchanged/decreases)
because demand is (elastic/unitary elasticfinelastic).

&esdon Four (Per unit sales tax)


lhe uble below shows the demand and supply schedules for the market for coffee in Roastville.
A tax on coffee of 75 cents per pound is proposed and the local government asks you to examine
the effects of the tax.
Price Quantity demanded Quantity supplied
(dollars per ound) (pounds per da ) (pounds per da )
1 480
2 360
3 240 240
4 120 480
5 720
(a) Draw the demand and supply curves, and label them DOand SOrespectively. Ifthere is no
ux on coffee, the equilibrium price is and the equilibrium quantity
is The price paid by consumers is The
price received by sellers is

(b) die tax, draw the new supply curve on your diagram in (a) and label it Sl. The price
paid by consumers is X 1
The price received by sellers is
The quantity of coffee sold is

(c) Out of the 75" per pound tax, is paid


by buyers and - is paid
by sellers. With the quantity of coffee sold in the market, the total tax revenue received by
the government is
6

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